Motorola Set to Launch Microsoft Phone This Year Thu July 24, 2003 07:18 AM ET By Lucas van Grinsven, European Technology Correspondent AMSTERDAM (Reuters) - U.S.-based Motorola will launch a mobile phone based on Microsoft software later this year, the first top five handset maker to do so, industry sources said on Thursday. "It will come later this year. They've been working on it for many months now," one industry source told Reuters. Pictures of the new Motorola handset, to be produced by Taiwan's contract manufacturer Chi Mei Communication Systems circulated on discussion groups on the Internet (http:/smartphone.modaco.com/). Motorola and Microsoft were not immediately available to comment. Motorola told Reuters in February it would bring out a Microsoft phone, mainly in response to U.S. operators' requests, but then declined to give details or timing. Motorola's model would be a clamshell with an internal antenna. Microsoft is struggling to break into the 450 million units a year mobile phone industry, but the major vendors have so far been reluctant to work with the software giant. Some have said they fear Microsoft is out to dominate their industry, just like it rules in the personal computer sector where its Windows software is the main operating system. The top five handset makers, including Motorola, jointly own Britain-based Symbian which also makes operating software for mobile phones, but Motorola's decision showed Microsoft could not be kept out of the sector forever, one consultant said. "This is a start of an era where the main manufacturers see that they can't live without Microsoft. The vendors will have to find a way to live with it," said John Strand in Copenhagen. Microsoft's software for mobile phones, which provides dressed-down Windows communications and computing tasks, is currently only available on handsets made by Taiwan's High Tech Computer. These handset are tailored according to wishes from mobile operators like France's Orange. The new Motorola handset could be ordered by Orange which recently agreed to buy bespoke handsets from the U.S. group. Motorola is the world's second largest handset maker but is losing market share against bigger rival Nokia. Nokia regards Microsoft as a major competitor despite its tiny handset presence at the moment. Nokia sells its own set of software applications which run on top of Symbian. Third-placed Samsung Electronics from South Korea announced Microsoft handsets, but pulled prototypes earlier this year after taking a stake in Symbian. It then said that Microsoft, if left unchecked, could grab most of the value in the handset industry.